A wider (and quicker) look back on the 2017/2018 Tax Year

So you may have read my post on last tax years performance, this post is more about reflecting on how it was overall.

So first of all, the numbers and where this puts me. So overall a very good year and a large increase in my total retirement pots – with growth and contribution, it went up more than my net income (but not gross). This really does give me hope and should not be sniffed at.

The increase and forecast in my ISA pots also make me start to think quite positively about where I am getting towards. Whilst this won’t be enough for me to stop working in 2025 without selling down some of the pots, it is still going to be a good healthy balance. Given when I started this blog I thought this was completely impossible, it shows what the regular saving and investing can do for you.

The mortgage continues to go down, but never as fast as I would like. We have just remortgaged – a new 5 year fix at 1.74% – a fair rate, and a lot lower than our last fix. We are going to leave our payments as they were which means if everything were to remain constant then we will have knocked almost 4 years off the mortgage – I won’t complain at that!

The amount of tax I paid last year was, whilst still obscene (in my opinion of course!), lower than the year before, a reflection of my tax rebate for putting my bonus into my pension.

So, from a financial point of view I am pretty happy.

What about outside of just the ££?

So, first up work. A real rollercoaster of a year if I am honest. I took on about 4 different roles over the course of the year culminating in the one I am still in now which is keeping me very busy (as an example, one Friday I was already on conference calls before 7am), but I am enjoying it. From the potential and career it is one I couldn’t say no to so I will continue to plug away at it.

I got a pay rise, which was good – although never as much as I would like or want, it was better than I had feared given the company targets. The bonus was lower than ideal, but we failed to meet our key target, so I can understand that.

Needless to say the whole bonus went into my pension so it didn’t feel real, but means my pension continues to head upwards.

And finally, the personal side. Overall yet another tough year (for reasons I will not be sharing on here). I don’t expect this to change over the next few years, although it is starting to highlight just how run down I am getting and the need for some quiet time out. To help this we have started a direct debit into a holiday fund for the first time – not a lot but it means we should be able to cover a break once a year!

I had Christmas off but was unwell, before then it was October. I definitely need a break!

 

Looking back at 2016/2017 (tax) year

So the tax year has ended and it is time to look back and see how it went. It took me a bit longer to get this written up – partly work related, but mostly because of my ISA. On the last day of the last tax year I threw all my spare cash into the ISA, knowing full well I would need to take some of it back out to pay the visa bill. Why? Well if I can get even a few extra pennies in, it all helps, and I have a psychological barrier about taking money out from that ISA so I know I will do everything I can to avoid it.

How did it go?

So, the all important question. Looking at the financial position I am in now – I honestly don’t think I could really have asked for it to have gone any better – other than winning the big one on the Premium Bonds or lottery of course! My savings rate was poor (remembering that it doesn’t include my 10% salary sacrifice into my company pension, or my basic rate tax relief in my personal pension) for what I want, but hey, I had some great holidays, an rather large unexpected tax bill, and bought some stuff 🙂

Expenses

So, most importantly, where did all that money I spent go last year? In most expensive first order….

Housing.

So this won’t be a surprise to most UK based people, and even less so to any other Londoners out there! The mortgage (and related insurance) was my biggest expense over the year. More than double any other expense of the year, this really is the killer. Ouch. Yes, we could move somewhere smaller, further out etc. and half that – in fact if we hadn’t moved here I would be mortgage free. I wouldn’t have been happy though. There is enough space for us now to not only live as we want, but also to put up our friends and guests when they come to stay, which is very important to us. The next target will be to not need the insurance (open to a question on need but…) – however I want to feel secure knowing that if anything happened to me my other half would be ok. Once my liquid savings (i.e. ISA) are greater than my mortgage balance, or close to, then I can stop and invest that extra. I am not sure I am brave enough to just cancel it and self insure.

I really do need to think about how best to try and reduce this whilst keeping the ISA savings going – a real trick. The mortgage isn’t up for renewal for over a year, and depending on the rates it’s likely we will go for another 5 year fix, in which case the more I can do now to reduce this then the better.

Holidays.

Yes – you read that right. My second biggest spend last year was holidays – money that probably should have gone into my ISA, but I spent it on a number of holidays. Do I regret it? Absolutely not! I have some fantastic memories that will be with me for as long as my memory lasts. This isn’t something I do every year (and don’t plan to), although it is about the journey as much as the destination! Could we have done the same travelling cheaper? Without a doubt we could – we didn’t need to spend as much as we did, but heck – you only live once!

Other.

Maybe a shock for some people, but the catch all pot was the third largest. Now this includes my tax bill, as well as a one off purchase I made. I don’t expect either of these two to happen this coming year so I am hopeful that this can be a lot lower this year, but the category will remain.

The rest….

As I look through the remainder of my tracker there is no other one individual item that really springs out – with one possible exception. Alcohol. If I add up all the money I have spent on Alcohol it is rather a large number. Oh well, I enjoy it! I will try and reduce it a bit, but not sure how successful I will be!

Savings

So… then what does that do to my savings overall? Well, I’ll get the number out of the way first. My overall savings rate for the tax year was…..

16%.

Not great (add in my 10% salary sacrifice, tax credit in pension and it would go up a bit), but this was hit hard by Novembers -111% savings rate and the tax bill in December. Take those out and it would add more than 10%. But I can’t so it is what it is.

Update: After great supportive comments from both Rory and HoSimpson on this savings rate, I decided to see what would happen if I included all my bonus, company pension and tax rebate on my private pension. I don’t usually include this as to me it isn’t “real” money. The pension contributions and rebate I don’t “see” as they don’t go through my current account. My bonus this year was in my bank account for less than 8 hours before it had been transferred to my pension! So what did that do to my savings rate? It took it to a shade over 41%. Wow. That has made my day!

Across the board, all of my savings vehicles have done pretty well (a more detailed post to follow), and by a freak of timing, my bonus that went into my pension got in the pension before the tax year end, but didn’t show online when I took the snapshot. Why is that so good? It means that in effect I just lump it at the start of the year and we see how we go – I may have just invested a huge lump of cash near the peak of the market, but as I can’t get at it for over a decade, that really is kind of irrelevant).

I am disappointed in myself in terms of how little I put into my ISA last year but then that is partly down to the tax bill, the purchase and several personal circumstances that threw some curve balls (all the more reason for having the emergency fund!).

Despite the low savings rate (compared to the FI community anyway!), the markets were very good to me – more so than I ever expect to see again, but who knows.

Non Financial “stuff”

So what about the non financial stuff then? Well I didn’t set any specific goals here, so this is a bit haphazard!

Health: I am pleased that I had managed to lose a small amount of weight (I suspect I may have put it back on but haven’t braved the scales yet!) but not as much as I would like, but then I don’t put the effort in, so only myself to blame on that. Every few months I swear that I will do more exercise, but somehow I just don’t.

I’ve also been cooking even more healthily using some of the dieting cook books I have, although I still sometimes suffer from a lack of energy (consistent long working days can take their toll). Hopefully I can fix this during the course of this year

Work: So work hasn’t been going too badly – the usual ongoing challenges and work, I got a “met” on my appraisal – pretty much the best I could have hoped for to be honest as it was my first year in the new company. Sadly this meant no pay rise, but that won’t deter me. I am looking forward to the new year and throwing myself into it with gusto to try and build on my career goal of a promotion by 2020 (it is getting harder the higher up the ladder you go!). Steady as she goes. The hours are starting to ramp up again which isn’t great, and hence my posts are coming at the weekends, but it pays the bills, and that is why I get paid what I do, and the bonus I do. No overtime but they compensate for it that way I guess.

Friends and Family: So the family side has been a huge focus over the last year for various reasons, and sadly to the detriment of my friends. Fortunately I have a great bunch of friends who understand the circumstances and, so far, haven’t held it against me! I am hoping to be able to get a more level playing field this year, but who knows what may happen.

As I seem to be one of the few who only does a tax year review, I wont ask how your year was!